Category: Blog posts

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Navigating the EU-U.S. trade relationship

2025 marked a decisive break in relations between the United States and Europe. From U.S. Vice-President Vance’s speech in February at the Munich Security Conference to the publication of the U.S. National Security Strategy at year’s end, Washington has framed the European Union not as a strategic partner but as an obstacle to U.S. objectives. This shift was illustrated throughout the year by escalating trade actions, growing divergence over Ukraine, and threats against tech regulation. By the end of the year, the EU had accepted an unequal trade deal with the United States, undermining its long-standing self-image as a ‘soft power’.

The EU is also addressing mounting tensions with China, a consequence of the widening Chinese trade surplus, its willingness to assert its control over rare earths and magnets, and a series of tariff actions affecting particularly agri-food products. Trade relations with Russia have been subject to restrictions since the Russian invasion of Crimea in 2014 and subsequent sanctions following its invasion of eastern Ukraine.… Read the rest

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2025 was a record year for farm income, though not for all

As the tractors arrived in Brussels yesterday, it is important to keep a sense of perspective. European farm incomes broke a new record high in 2025 – also in real terms – although not all farmers participated in this. But amid all the doom and gloom spread about an industry on its knees (a narrative with an explicitly political objective), and despite the evident challenges, it is even more important to keep an eye on the underlying facts.

The record farm income is reported in Eurostat’s first estimate of the economic accounts for agriculture earlier this week. This gives a snapshot of the economic health of the agricultural sector, summarised in what Eurostat calls Indicator A.

Indicator A represents an index of the real factor income per annual work unit (AWU) in agriculture. It measures the remuneration of all factors of production (land, capital, labour) by the equivalent of each full-time worker in the agricultural industry, presented in real terms (adjusted for inflation) and expressed as an index.… Read the rest

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The looming Mercosur tragedy

Weak political leadership in Europe looks likely to doom the EU-Mercosur free trade agreement in a vote among EU Member States later this week. Denmark, as current Council President, has indicated it intends to schedule a vote at Ambassador level (COREPER II) to take place either Thursday or Friday this week. To be approved, the Agreement must gain the support of 55% of Member States (currently, 15 out of 27) representing at least 65% of the EU population. The Agreement can be blocked by a blocking minority which requires at least 4 countries representing at least 35% of the EU population. If a country abstains, its vote does not count either for the proponents or opponents.

As the thresholds are calculated against the total EU membership, and not just those who cast a yes/no vote, an abstaining country makes it more difficult both for proponents to gain a qualified majority and for opponents to form a blocking minority.… Read the rest

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LULUCF targets off-course

The EEA recently published updated projections for LULUCF emissions and removals by Member State to 2030 and 2050. It is not good news. Although the fall in the LULUCF sink appears to have been halted over the past six years, the EU27 net sink in 2023 was just 198MtCO2e and estimated at 212MtCO2e in 2024. This compares to the 2016-2018 average of 268MtCO2e and the 2030 target of 310MtCO2e set in the LULUCF Regulation (Figure 1).

Figure 1. EU emissions and removals of the LULUCF sector by main land use category
Source:  EEA, 2025.

The projections show that, with existing measures (the WEM scenario), the EU27 net sink is projected to be 183Mt CO2e in 2030 (all subsequent figures are in CO2e units). This does not necessarily imply a further fall in removals, as the base year removals for the projections in 2023 and 2024 are lower in the projections than in the inventory figures (165Mt and 172Mt, respectively).… Read the rest

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The role of capital in agricultural productivity growth

Discussions on the future competitiveness of European agriculture often return to the role of capital. Investment in modern equipment, digital technologies, and precision farming systems is widely regarded as essential to sustain productivity growth and to meet new environmental and market challenges. While the Draghi report on EU competitiveness did not directly address the agriculture and food sector, questions are increasingly asked about whether the current pace and composition of investment are adequate, and whether capital is being used efficiently within the sector. These questions are particularly relevant as structural change continues, with a declining labour force and a growing reliance on technological and digital solutions.

The relationship between capital, labour and output in agriculture provides a useful framework for examining these issues. In accounting terms, labour productivity—measured as output per worker—depends both on the amount of capital each worker uses (capital per worker) and on how efficiently that capital is employed (output per unit of capital).… Read the rest

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Understanding the structure of EU agriculture

Agricultural structure data represent the crown jewels of agricultural policymaking. For researchers and policymakers alike, the Farm Structure Survey and Agricultural Census are a rich and detailed source for understanding how Europe’s farms operate and evolve. They provide indispensable insights into the dynamics of land use, labour, and production systems, informing strategies for food security, generational renewal, environmental stewardship, and rural development.

In this post, I look at how agricultural structure data are used to track changes in the structure of agricultural holdings over time. I focus in particular on the statistical coverage of the data, the population of holdings that are included. Choosing different cut-off points for the population of holdings represented by the data can give us very different pictures of the agricultural sector.

For example, in a statistical brief summarising the results of the 2020 Agricultural Census, Eurostat informs us that there were 9.1 million agricultural holdings in the EU, of which 2.9 million holdings (the equivalent of 31.8 %) were located in Romania. However,… Read the rest

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Further reflections on CAP governance and budget

This post has been revised to take account of the important role that the proposed ‘flexibility amount’ will play in influencing the scope that Member States will have to top up their minimum CAP ring-fenced amounts when preparing the CAP chapter of their National Plans. Its significance is such that it changes the tenor and conclusions of the original post. I am particularly grateful to Elsa Régnier for drawing this issue to my attention. I made a further revision subsequently as detailed at the end of the post to compare the minimum ring-fenced amounts for CAP income support with the pre-allocated amounts to Member States in 2021-2027 rather than with a hypothetical extension of the 2027 amounts, and as well corrected the calculation of the flexibility amount.

IDDRI, the Institut du développement durable et des relations internationals, has published a policy brief on the European Financial Framework 2028-2034: Key issues for the agricultural sector written by Elsa Régnier, Aurélie Catallo, and Pierre-Marie Aubert.… Read the rest

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Relevant data on CAP implementation no longer published

Please note that DG AGRI have now (22 October 2025) published a CAP Performance Tables Excel file containing details for all interventions by Member States on the number of beneficiaries, area covered and expenditure for the 2023-2024 year for the CAP Strategic Plans. It is planned to load these data into the PMEF Data Explorer in the DG AGRI Agri-food Data Portal in due course. These tables provide the data that I was looking for in this post.

DG AGRI published its first status report on the implementation of country CAP Strategic Plans for the year 2023-2024 in June 2025. The report is based on the Annual Performance Reports that Member States must submit to the Commission by 15 February for the financial year ending the previous 15 October. Thus, this report draws on the Performance Reports submitted for the second year of the programming period ending October 2024. As area and animal-based payments paid in the financial year October 2023-October 2024 refer to claim year 2023, much of the data in practice refers to the first year of implementation of the new CAP.… Read the rest

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European Parliament votes on CAP simplification and strengthening farmers’ position in the food supply chain

The European Parliament voted today to determine its position on two amending pieces of legislation proposed by the Commission that can significantly modify rules for Member States and farmers in the remaining years of the current CAP. One is the Omnibus Simplification Regulation COM (2025) 236 amending the CAP Strategic Plans Regulation 2021/2115 and the Common Market Organisation (CMO) Regulation 1308/2013, while the other is the proposal COM (2024) 577 to amend the CMO Regulation and some aspects of the Strategic Plans Regulation to strengthen farmers’ position in the food supply chain.

The context for these two proposals is, firstly, the general shift in Commission priorities to boost competitiveness, innovation and growth in the wake of the Draghi report. This report called for increased investment in innovation, a stronger Single Market through market integration, a greater focus on resilience and strategic autonomy for critical sectors like energy and raw materials, as well as a more supportive business environment by reducing regulatory burdens.… Read the rest

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The EU-Mercosur Partnership Agreement will have a minimal effect on the EU beef market and should be ratified

The European Commission finally put forward the EU-Mercosur Partnership Agreement concluded in December 2024 for ratification on 3 September 2025. The Commission adopted proposals for Council decisions on the signature and conclusion of two parallel legal instruments: the EU-Mercosur Partnership Agreement (EMPA) and the interim Trade Agreement (iTA). The iTA will be repealed and replaced by the EMPA once the latter is fully ratified and enters into force. 

Livestock farmers continue to protest and to mobilise against ratification of the Agreement, arguing that it will open the EU market to a flood of South American imports and decimate the EU beef sector. But for beef and poultry, the tariff concessions are limited to relatively small increases in tariff rate quotas. These additional imports will result in lower prices for EU farmers compared to what otherwise they might expect, but recent empirical research suggests that the effect will be very muted.

In a recently-published paper with Alex Gohin, we estimate that if the EU had fully liberalised its beef tariffs with Mercosur countries in 2017 (the latest year for which all the relevant data for the analysis was available), beef farmers would have suffered a significant negative impact on their income of more than -5%.… Read the rest